Annual report pursuant to Section 13 and 15(d)

INCOME TAXES

v3.3.1.900
INCOME TAXES
12 Months Ended
Dec. 31, 2015
Income Tax Disclosure [Abstract]  
Income Tax Disclosure [Text Block]
11.
INCOME TAXES
  
 
 
 
December 31,
2015
 
 
9 month period
ended December
31, 2014
 
 
 
 
$
 
 
$
 
Components of net loss before income taxes consists of the following:
 
 
 
 
 
 
 
U.S.
 
 
(2,372,510)
 
 
-
 
Canada
 
 
(3,221,396)
 
 
(2,464,747)
 
 
 
 
(5,593,906)
 
 
(2,464,747)
 
 
Reconciliation of the statutory tax rate of 35% (2014 – 26.5%) and income tax benefits at those rates to the effective income tax rates and income tax benefits reported in the statement of operations and comprehensive loss is as follows:
 
 
 
 
2015
 
 
 
2014
 
 
 
 
$
 
 
 
$
 
Net loss for the period before recovery of income taxes
 
 
(5,593,906)
 
 
 
(2,464,747)
 
 
 
 
 
 
 
 
 
 
Statutory rate
 
 
35
%
 
 
26.5
%
Expected income tax recovery
 
 
(1,957,867)
 
 
 
(653,158)
 
Tax rate changes and other basis adjustments
 
 
364,651
 
 
 
(29,109)
 
Stock-based compensation
 
 
587,381
 
 
 
-
 
Non-deductible expenses
 
 
57,625
 
 
 
193,305
 
Change in valuation allowance
 
 
948,210
 
 
 
488,962
 
 
 
 
 
 
 
 
 
 
Recovery of income taxes
 
 
-
 
 
 
-
 
 
Deferred tax reflects the tax effects of temporary differences that gave rise to significant portions of deferred tax assets and liabilities and consisted of the following:
 
 
 
 
2015
 
 
2014
 
 
 
 
$
 
 
$
 
Property and equipment
 
 
47,495
 
 
36,940
 
Share issue costs
 
 
3,877
 
 
162,350
 
SR&ED pool
 
 
340,585
 
 
7,137
 
Other
 
 
39,947
 
 
18,621
 
Non-capital losses - Canada
 
 
1,149,389
 
 
812,522
 
Net operating losses - U.S.
 
 
404,487
 
 
-
 
Valuation allowance
 
 
(1,985,780)
 
 
(1,037,570)
 
 
 
 
 
 
 
 
 
 
 
 
-
 
 
-
 
 
The Company has non-capital losses in its Canadian subsidiary of approximately $4,337,319 which will expire between 2031 and 2035. The Company has net operating losses in the U.S. parent Company of $1,155,674 which will expire in 2035.
 
Income taxes are provided based on the liability method, which results in deferred tax assets and liabilities arising from temporary differences. Temporary differences are differences between the tax basis of assets and liabilities and their reported amounts in the consolidated financial statements that will result in taxable or deductible amounts in future years. The liability method requires the effect of tax rate changes on current and accumulated deferred taxes to be reflected in the period in which the rate change was enacted. The liability method also requires that deferred tax assets be reduced by a valuation allowance unless it is more likely than not that the assets will be realized.
 
The Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the consolidated financial statements is the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority. The Company recognizes interest accrued on uncertain tax positions as well as interest received from favorable tax settlements within interest expense. The Company recognizes penalties accrued on unrecognized tax benefits within general and administrative expenses. As of December 31, 2015 and 2014, the Company had no uncertain tax positions.
 
In many cases the Company’s uncertain tax positions are related to tax years that remain subject to examination by tax authorities. The following describes the open tax years, by major tax jurisdiction, as of December 31, 2015.
 
United States - Federal
 
2013 - present
United States - State
 
2013 - present
Canada - Federal
 
2012 - present
Canada - Provincial
 
2012 - present